THE EUROPEAN Union has pushed Greece to the brink of economic collapse after the Eurozone lenders halted a 45 billion euro loan to help the already struggling country.

The deal, equivalent to £37.7bn, was to be given to Greece to assist the struggling country with short-term debt relief as it is already mired in economic problems - a deep recession and soaring unemployment - and is struggling to cope with the influx of migrants that have landed in the country from north Africa.

The funds that had previously been promised, which were to be used to shore up Greek banks’s liquidity, have now been halted after the government, led by the left-wing Syriza leader Alexi Tsipras, promised to make a one-off payment to pensioners in December.

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Mr Tsipras also announced that he scheduled VAT hike on the islands of the north Aegean Sea — which are bearing the brunt of the refugee crisis — will be suspended as the islands continue to struggle to cope with the thousands of refugees that have crossed the Mediterranean from places like north Africa and Turkey.

Earlier this week, Germany asked the institutions involved in Greece's aid programme — the International Monetary Fund (IMF), European Central Bank and the European Stability Mechanism (ESM) — to assess whether Mr Tsipras' actions are compatible with its EU bailout obligations.

Michel Reijns, spokesman to Eurogroup chief Jeroen Dijsselbloem, said in a statement: “The institutions have concluded that the actions of the Greek government appear to not be in line with the agreements."

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Greek pensioners are likely to suffer due to the withdrawl of finances from the EU

Protest in Greece turns violent

Shocking photographs depict clashes between police and protesters

Protesters clash with riot police during a protest at Syntagma square, in Athens, Greece, 17 May 2017

He added that some member states see it this way also and thus there is no unanimity now for implementing the short-term debt measures, saying: ”We await a full report of the institutions in January.”

Last week the finance ministers of Eurogoup reviewed Greece's economic progress to finalise a budget for 2017 and set a fiscal target for 2018 of 3.5 percent of GDP to be used as a primary surplus to pay back creditors.

They also called for more austerity measures to be put in place, including more severe labour and reform measures, which called for lifting restrictions on collective dismissals in the private sector, suspending collective bargaining and weakening trade union laws.

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The IMF's chief economist Maurice Obstfeld

According to the IMF's chief economist Maurice Obstfeld and the head of its Europe division, these new austerity measures are not realistic and cannot be attained.

Danish economist Poul Thomsen, director of the IMF's European department, has also aired doubts over the ability of Greece to meet the harsh austerity targets which were conditions of the country’s 86 billion euro (£72 bn) bailout programme, which would appear to raise doubts over the IMF’s future participation in the three-year rescue plan.

In a joint blog post Mr Obstfeld and Mr Thomsen wrote: ”We think that these cuts have already gone too far, but the ESM program assumes even more of them.

”We do not believe that Greece can come close to sustaining even a modest primary surplus and realise its ambitious long-term growth target without a radical restructuring of the public sector."